So What is a Startup?

From the perspective of a company like Google or from a venture capitalist’s point of view, a startup is a company that was formed within the last 4 or 5 years and has grown to 20 – and sometimes as many as 50 employees.

I guess that is understandable, since what most practitioners think of as a startup wouldn’t register on the radar of most venture capitalists.

In British Columbia where I practice, every year BC Stats publishes a study called ‘Small Business Profile‘. Every year the studies show that only around 5% of companies have more than 20 employees. In fact companies with 50 or more employees are considered large companies (in BC at least) – which might seem to turn conventional wisdom on it’s head. In that respect BC differs from Canada, which has the cut-off for medium-sized businesses at 100 employees.

StatsCan Employer Businesses by Firm Size
2015 Statistics Canada – Number of Employer Businesses by Firm Size

Note that “non-employer” businesses include 2.7 million self-employed Canadians – so that this table contains only a portion (half?) of all businesses in Canada in 2015.

So while a VC may think of a 6 year old company with 25 employees as a startup, there is a lot of difference between that company and a 2 year old startup with 3 employees that is trying to create “traction”.

LEAN ACCOUNTING for Startups is geared to the 54.1% of employer businesses in Canada that have 4 or fewer employees – as well as the non-employer businesses that don’t make that list.



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